Much has been written about the budding friendship between President-elect Donald Trump and the world’s richest man, Elon Musk.

What seemed like an odd couple turned into a job opportunity for Musk, and last week the two were seen together in Palm Beach, Florida, ringside at a game of Ultimate Fighting Championship in New York and eating McDonald’s on a jet.

Before the election, Trump announced he would put Tesla’s South African-born CEO in charge of a government efficiency commission. Last week, Trump made things more concrete and confirmed that the new agency would be called the Department of Government Effectiveness, or DOGE.

What is Musk’s new job?

Since it’s a new agency, no one really knows what it will do and how much authority it will have. Ultimately, it will likely be a small advisory group that operates outside of government, with no real regulatory authority. What he will likely have is influence and a vocal spokesperson in the form of Musk.

The Department of Government Effectiveness aims to cut $2 trillion from the US federal budget – which stands at around $6.8 trillion (€6.4 trillion) for the 2024 fiscal year – in an effort to permanently shrink the federal government by cutting bureaucracy, regulations, and unnecessary spending.

Even though Musk is known for cutting costs at his own companies, cutting federal spending will be a significant challenge. The project is expected to be completed by July 2026.

Donald Moynihan, a professor of public policy at the University of Michigan’s Ford School of Public Policy, thinks Elon Musk has “no real experience with government beyond suing it or spreading conspiracy theories about him.” He told DW that the federal government needs to be modernized, “but the only thing Musk has talked about is cutting costs and punishing people he disagrees with. His basic calculations do not match”.

In 2023, a third of the then $6.1 trillion budget was spent on Social Security and Medicare — programs that Trump said he would not touch. Overall, just $1.7 trillion was discretionary spending that lawmakers control through appropriations bills, according to the nonpartisan Congressional Budget Office.

SpaceX and a billion-dollar conflict of interest

Musk already has a lot on his plate running six companies like Tesla, SpaceX, and X (formerly Twitter). Such a new position is riddled with conflicts of interest, especially since a number of its companies receive government grants or direct federal contracts, making them government contractors. They also develop and use innovations and technologies that have pushed regulatory boundaries.

“I can’t think of another example of someone having such clear and obvious conflicts with a public official offering advice on budget, structure and firing employees that directly affects his businesses,” Moynihan said . “It’s caricatured corruption.”

Over the years, SpaceX has received billions in contracts from NASA and the Department of Defense to launch satellites, maintain the International Space Station or use its Starlink satellite communications network.

Over the past decade, these SpaceX contracts have amounted to more than $15 billion, according to figures analyzed by the New York Times. Last year alone, his companies won 100 different contracts with 17 federal agencies, totaling $3 billion.

SpaceX celebrates milestone in reusable rockets

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Some of the other conflicts of interest

Musk has a history of very public altercations with federal departments and other regulators. An investigation by the US financial markets regulator, the Securities and Exchange Commission (SEC), led to charges of securities fraud in 2018. The resignation of Tesla’s chairmanship was part of the subsequent settlement.

Tesla has received huge tax breaks and other incentives from various states. At the federal level, it has a small government contract for the supply of certain vehicles. But Musk could convince Trump to maintain tax credits for electric vehicles (EVs) to maintain sales, or to increase tariffs on competitors that make vehicles in Mexico or elsewhere.

It could influence regulators who want to take a closer look at Tesla’s autonomous driving efforts. He could also convince those in power to keep emissions rules in place that allow Tesla to sell credits worth billions of dollars to other automakers that aren’t producing enough electric vehicles.

Musk’s other companies, xAI, The Boring Co, Neuralink and X, have no government contracts. Yet they have a lot to gain from being close to Trump. This proximity could power artificial intelligence (AI), influence other regulations or help block its social media rival, TikTok.

Could the Trump-Musk friendship end?

Trump is not the first president to want to cut spending or bring in efficiency experts. What’s different this time is who the president-elect appeals to and the opportunities for personal enrichment.

So far, Trump has been careful to say that Musk would not formally be part of the executive branch of government and would only “provide advice and guidance from outside of government, and would partner with the White House and the Office of Management and Budget to drive large-scale structural reform. »

This is important because federal law prohibits people from participating in government affairs in which they have a financial interest.

The most unpredictable part of this whole project is Trump himself. He has a long track record of picking favorites and then suddenly abandoning them. Abandoning the world’s richest man could one day provide an irresistible boost to Trump’s ego.

They’re both big personalities who like to be in the spotlight, but Trump “can’t stand to be overshadowed,” Moynihan says. Maintaining this unlikely relationship will be a challenge equivalent to cutting billions of dollars. “In some ways, assigning Musk to an advisory board could be seen as a demotion, because it’s not clear whether it will achieve anything.”

Edited by: Uwe Hessler